SANDRA TURNER, ET AL., PETITIONERS V. LINDA MCMAHON, OTIS R. BOWEN,
ET AL.
No. 87-1867
In the Supreme Court of the United States
October Term, 1988
On Petition for a Writ of Certiorari to the United States Court of
Appeals for the Ninth Circuit
Brief for the United States in Opposition
TABLE OF CONTENTS
Questions Presented
Opinions below
Jurisdiction
Statement
Argument
Conclusion
OPINIONS BELOW
The opinion of the court of appeals (Pet. App. 1-29) is reported at
830 F.2d 1003. The decision of the district court (Pet. App. 30-53)
is unreported.
JURISDICTION
The judgment of the court of appeals (Pet. App. 56-57) was entered
on October 16, 1987. A petition for rehearing and suggestion en banc
were denied on February 22, 1988 (Pet. App. 58-61). The petition for
a writ of certiorari was filed on May 6, 1988. The jurisdiction of
this Court is invoked under 28 U.S.C. 1254(1).
QUESTIONS PRESENTED
1. Whether Section 402(a)(22) of the Social Security Act, 42 U.S.C.
(Supp. III) 602(a)(22), which requires a state agency administering
the Aid to Families with Dependent Children program (AFDC) to recover
"any overpayment" made to AFDC recipients, applies to overpayments
made under a later overturned court order.
2. Whether Section 402(a)(22) of the Social Security Act, 42 U.S.C.
(Supp. III) 602(a)(22), unlawfully curtails the equitable jurisdiction
of federal courts.
STATEMENT
1. In November 1981, petitioners, a class of persons receiving
assistance under the Aid to Families with Dependent Children (AFDC)
program, filed suit in the United States District Court for the
Northern District of California. The complaint alleged, among other
claims, that the State of California, in implementing directions
issued by the Secretary of the Department of Health and Human Services
(HHS) (Secretary), had improperly calculated the amount of benefits
due those AFDC recipients who work. /1/ The district court,
concluding that the $75 work expense disregard should be deducted from
net income, and thus should not be reduced by work expenses reflected
in mandatory payroll deductions, enjoined the State of California from
implementing its new regulations and enjoined the Secretary from
terminating federal matching funds due the State; the court of
appeals affirmed (Turner v. Woods, 559 F. Supp. 603 (1982), aff'd, 707
F.2d 1109 (1983)). Pet. App. 10.
On August 10, 1984, after certiorari was granted, /2/ Justice
Rehnquist, acting as Circuit Justice for the Ninth Circuit, granted
the Secretary's application for a stay of the district court
injunction "prospectively from July 18, 1984." Heckler v. Turner, 468
U.S. 1305, 1309 (1984). /3/ Thereafter, this Court unanimously
reversed the court of appeals' judgment, holding that "mandatory tax
withholdings were among the items encompassed by the flat-sum
disregard of (Section 402(a)(8))." Heckler v. Turner, 470 U.S. 184,
211 (1985).
2. As a result of this Court's decision in Heckler v. Turner, the
Secretary, on April 30, 1985, ordered states to recover overpayments
made to AFDC recipients between the date of the district court's
permanent injunction, July 29, 1982, and Justice Rehnquist's stay,
August 10, 1984 (Pet. App. 11). /4/ When the State of California
sought to comply with the Secretary's order, petitioners filed a
motion in the district court to prohibit the State from recouping any
AFDC overpayments. In their supplemental complaint, petitioners
argued that overpayments made to AFDC recipients under a court order
were not "overpayments" within the meaning of Section 402(a)(22) and
the applicable regulations. The State countered that such
overpayments were recoverable under the statute. The State also filed
a third-party complaint against the Secretary, asserting that if the
State were prohibited from recovering overpayments, the Secretary
should be prohibited from imposing sanctions for the State's failure
to comply with federal law. Pet. App. 11-14.
The district court, presented with cross-motions for summary
judgment, entered judgment in favor of petitioners. After reviewing
the legislative history of Section 402(a)(22), the court concluded
that "payments made pursuant to an injunction which is subsequently
reversed are not 'overpayments' under 42 U.S.C. 602(a)(22) * * *"
(Pet. App. 43). The court accordingly enjoined the State from
"recouping (AFDC) benefits paid pursuant to (the) permanent injunction
of July 29, 1982" (id. at 52), and also enjoined the Secretary "from
taking any action to declare that California is out of conformity with
federal law" (id. at 52-53).
3. The court of appeals reversed (Pet. App. 1-29), holding that
"(t)he plain language" of Section 402(a)(22) required the recoupment
of "any overpayment" to AFDC recipients and did not "distinguish
between classes of overpayments that may be recouped" (Pet. App. 20).
The court found that the Secretary's regulation, 45 C.F.R.
233.20(a)(13), which "impose(d) no restriction on the right of a state
to recoup any overpayment" (Pet. App. 21), fully supported this
reading of Section 402(a)(22).
The court of appeals rejected petitioners' argument that such a
strict reading of the statute would unconstitutionally "curtail a
district court's equitable jurisdiction" (Pet. App. 26). Rather than
limiting a district court's equitable jurisdiction, Congress
"expressly expanded the remedies available to recover an overpayment
of AFDC funds" (id. at 27). In the court's view, Section 402(a)(22)
permitted a state to seek recovery of an overpayment under its "common
law right of restitution" (Pet. App. 27, citing Arkadelphia Milling
Co. v. St. Louis S.W. Ry., 249 U.S. 134 (1919)), or under the statute
itself by filing an action under state law. Finally, the court
observed that Congress has the power under Article III "to fashion new
remedies" (Pet. App. 27, citing the Declaratory Judgment Act, 28
U.S.C. 2201 et seq.), and "to limit the applicability of the
traditional equitable remedies available in the district court" (Pet.
App. 27-28, citing Aetna Life Ins. Co. v. Haworth, 300 U.S. 227
(1937)). /5/
ARGUMENT
The decision below is correct. It does not conflict with any
decision of this Court or of any other court of appeals. Accordingly,
review by this Court is not warranted.
1. Petitioners renew the contention (Pet. 30-42) that, despite the
language of Section 402(a)(22), the statute does not include
overpayments made under an injunction reversed on appeal. This Court
has long recognized, however, that "(t)here is * * * no more
persuasive evidence of the purpose of a statute than the words by
which the legislature undertook to give expression to its wishes."
United States v. American Trucking Ass'ns, 310 U.S. 534, 543 (1940).
Section 402(a)(22) unambiguously provides that an AFDC plan must
"provide that the State agency will promptly take all necessary steps
to correct any overpayment or underpayment of aid under the * * * plan
* * *." The statute makes no distinctions between types of
overpayments. And, unlike other statutes authorizing agencies to
recover overpayments, /6/ Section 402(a)(22) does not authorize the
Secretary to refrain from seeking overpayments where recovery would be
inequitable. By its terms, the Secretary must recover any and all
overpayments. /7/
Contrary to petitioners' argument (Pet. 35-42), the legislative
history confirms the straightforward meaning of Section 402(a)(22).
Congress enacted the recoupment provision as part of Section 2318 of
the Omnibus Budget Reconciliation Act of 1981 (OBRA), Pub. L. No.
97-35, 95 Stat. 856. This provision was a critical part of "the
cost-cutting focus of the OBRA amendments." Heckler v. Turner, 470
U.S. 184, 205 (1985). Indeed, the Senate Report on OBRA stated that
the recoupment provision would save the government, in the years 1982
through 1984, an estimated $330 million. See S. Rep. 97-139, 97th
Cong., 1st Sess. 519 (1981). By requiring recoupment of "any
overpayment," Congress clearly intended to save the federal government
substantial sums of money. Although a common or literal reading of a
statute may be rejected "where acceptance of that meaning would lead
to absurd results * * * or would thwart the obvious purpose of the
statute" (Helvering v. Hammel, 311 U.S. 504, 510-511 (1941)),
Congress's cost-cutting objective in enacting the statute plainly
supports the plain meaning of the provision that any overpayment
should be recovered.
2. Petitioners also argue (Pet. 13-16, 19-24) that the court of
appeals' literal reading of Section 402(a)(22) unconstitutionally
deprives district courts of equitable jurisdiction. Petitioners'
claim is wrong. Congress can, consistently with Article III, create
statutory remedies unknown at common law; this is precisely the
essence of the recoupment provision. And, contrary to petitioners'
suggestion, Congress can limit a district court's power to apply
traditional equitable remedies. For exam;ple, Congress, through
Section 1 of the Norris-La Guardia Act, 29 U.S.C. 101, deprived
federal courts of jurisdiction to enter injunctive relief in certain
labor disputes. Lauf v. E.G. Shinner & Co., 303 U.S. 323, 330 (1938)
(footnote omitted) ("There can be no question of the power of Congress
(in enacting the Norris-La Guardia Act) to define and limit the
jurisdiction of the inferior courts of the United States."); see also
the Tax Injunction Act, 28 U.S.C. 1341; the Johnson Act, 28 U.S.C.
1342; the Anti-Injunction Act, 28 U.S.C. 2283. /8/ Under the
circumstances, Congress's requiring repayment of AFDC benefits did not
impermissibly infringe upon the equitable jurisdiction of the federal
courts. /9/
CONCLUSION
The petition for a writ of certiorari should be denied.
Respectfully submitted.
CHARLES FRIED
Solicitor General
JOHN R. BOLTON
Assistant Attorney General
WILLIAM KANTER
RICHARD OLDERMAN
Attorneys
JULY 1988
/1/ The primary issue was whether the $75 standard work expense
disregard in Section 402(a)(8) of the Social Security Act, 42 U.S.C.
(Supp. III) 602(a)(8), should be deducted from net income or gross
income in determining AFDC benefits. In other words, whether the
disregard encompassed all work expenses, including those reflected in
mandatory payroll deductions, or only those expenses the claimant paid
out of his disposable income. Pet. App. 10.
/2/ See 465 U.S. 1064 (1984).
/3/ Justice Rehnquist based his decision on the recently-enacted
Deficit Reduction Act of 1984, Pub. L. No. 98-369, 98 Stat. 494, which
made clear that the term "earned income" in Section 402(a)(8) of the
Social Security Act meant gross earned income. See 468 U.S. at
1306-1307.
/4/ See HHS Action Transmittal No. SSA-AT-85-10 (Apr. 30, 1985).
The Social Security Act and the Secretary's regulations authorized
this directive. Section 402(a)(22) of the Social Security Act, 42
U.S.C. (Supp. III) 602(a)(22), requires that state AFDC plans must
provide that the State agency will promptly take all
necessary steps to correct any overpayment or underpayment of
aid under the State plan, and, in the case of --
(A) an overpayment to an individual who is a current
recipient of such aid * * *, recovery will be made by repayment
by the individual or by reducing the amount of any future aid
payable to the family of which he is a member * * *.
(B) an overpayment to any individual who is no longer
receiving aid under the plan, recovery shall be made by
appropriate action under State law against the income or
resources of the individual or the family * * *.
The applicable regulations reiterate that a state "shall
recover" an overpayment from, among others, "any individual
members of the overpaid assistance unit whether or not currently
a recipient" (45 C.F.R. 233.20(a)(13)(B)). The Secretary has
defined an overpayment as "a financial assistance payment
received by or for an assistance unit for the payment month
which exceeds the amount for which that unit was eligible" (45
C.F.R. 233.20(a)(13)). Recovery is to be by set-off, but "(i)f
the State recovers from individuals who are no longer
recipients, or from recipients who refuse to repay the
overpayment from their income and resources," recovery is to be
by "appropriate action under State law * * *" (45 C.F.R.
233.20(a)(13)(B)).
/5/ The court also rejected petitioners' argument that Section
402(a)(22) was unconstitutional because "'(a)t no time would the state
welfare agency have to pose the issue of restitution to a court'"
(Pet. App. 24). Under California law, the State must notify each AFDC
recipient of the proposed reduction in benefits and must provide a
hearing if the recipient so requests. See Cal. Welf. & Inst. Code
Section 11004(e) (West Supp. 1988). If the recipient remains
dissatisfied after the hearing, he may seek judicial review of the
decision under California law. See Cal. Welf. & Inst. Code Section
10962 (West 1980). In other words, "California has a statutory scheme
which permits * * * AFDC recipients to obtain an administrative
hearing and judicial review of a determination made concerning
overpayments" (Pet. App. 26).
In light of its disposition, the court of appeals also vacated the
award of attorneys' fees to petitioners under 42 U.S.C. 1988 (Pet.
App. 28).
/6/ For example, 42 U.S.C. 404, pertaining to Federal Old Age,
Survivors, and Disability benefits, authorizes the Secretary to
recover overpayments (42 U.S.C. 404(a)), but provides (42 U.S.C.
404(b)) that
there shall be no adjustment of payments to, or recovery by
the United States from, any person who is without fault if such
adjustment or recovery would defeat the purpose of this
subchapter or would be against equity and good conscience.
Similar language appears in other federal benefits statutes (see,
e.g., 38 U.S.C. 3102(a) (overpayment of veterans' benefits); 42
U.S.C. (Supp. III) 1383(b)(1) (Supplemental Security Income for the
Aged, Blind, and Disabled (SSI) benefits)); Section 402(a)(22)
contains no such qualifications.
/7/ Petitioners also contend (Pet. 33-34) that Section 402(a)(22)
cannot be read literally because the Secretary treats this provision
differently from Section 403(i) of the Social Security Act, 42 U.S.C.
603(i). The latter section authorizes the Secretary to withhold from
states, in certain well-defined circumstances, funds equivalent to
"erroneous excess payments." Congress defined this term to include
"overpayments to eligible families" (42 U.S.C. 602(i)(1)(C)(ii)).
Section 403(i), however, differs from Section 402(a)(22) in several
respects, including its having a provision authorizing the Secretary
to waive the recovery of overpayments (42 U.S.C. 603(i)(1)(B)), and a
provision setting tolerance levels for erroneous overpayments (42
U.S.C. 603(i)(1)(A)). Moreover, the record in this case suggests,
contrary to petitioners' assertion, that the Secretary would read the
term "excess erroneous payments" as including those made under a later
reversed court order.
/8/ Cf. Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240 (1937)
("In providing remedies * * * in relation to cases and controversies
in the constitutional sense the Congress is acting within its
delegated power over the jurisdiction of the federal courts which the
Congress is authorized to establish.").
/9/ Petitioners also apparently contend (Pet. 16-19, 24-30) that,
under the court of appeals' application of Section 402(a)(22), the
State's recoupment of overpayments would escape meaningful judicial
review. As the court of appeals correctly concluded (Pet. App. 26),
however,
California has a statutory scheme which permits current AFDC
recipients to obtain an administrative hearing and judicial
review of a determination made concerning overpayments.
Similarly, a former AFDC recipient is provided judicial review
when the county initiates an action to collect the overpayments.
Moreover, the Secretary's regulations provide that every AFDC
applicant or recipient "shall be informed in writing at the time of
application and at the time of any action affecting his claim * * *
(o)f his right to a hearing * * * (45 C.F.R. 205.10(a)(3)). These
state and federal provisions belie petitioners' assertion that
adequate judicial review would be unavailable.